Mortgage lending by banks

Fixed rate or variable, what is best for you?

Par know which of these two types of conditions you choose depends on many factors. First among them is their own risk tolerance, although it may pay less, but If after rising strongly in rates is going to cause major headaches, it is best to choose a fixed rate scheme.

Are best constant or variable payments?

Equal monthly schemes have the advantage that the payments at the beginning of the life of the loan are lower than those under a traditional system, even higher at the end. However, the fixed payment plans usually have a very important disadvantage: the principal payments are lower initially, but the balance down to a more gradual pace and so then you have to pay higher interest.

To compare between different offers to banks requesting an amortization schedule, which should show how much you will pay interest and principal each month over the life of the loan, and total payments.

What type of hitch and run for you?

The hitch required varies greatly according to the bank: the minimum is 25% and up to 45%. The lower the down payment, the bank lend at greater risk because the value of the collateral (the house) covers a smaller percentage of the loan value, taking as a result, end up paying more.

The cost of borrowing is higher than the yield available in any investment, and debt as well as any important involves risk. Therefore, it is a good idea to pay out of pocket the highest possible percentage of property value.

Commissions

In addition to payments and the interest on a mortgage loan there are other costs to consider, since the banks can charge arrangement fees for socio-economic studies, appraisals and legal costs (the latter have to pay even if you buy a home without credit). In total, this can represent up to 20% of the loan.

Recommendations

Remember this before applying for a mortgage loan:

• Give yourself time to gather and analyze information from different alternatives.
• Analyze your current financial situation.
• Observe carefully the various data offered by each institution in connection with mortgage and do a thorough analysis.
• Complete your mortgage credit information, with that you get from banks or Sofoles. You can go personally or viewed on their websites.